The United States should keep all options on the table regarding Iraqi-Turkish energy trade.

By Nicholas L. Borroz

President Obama started his first term by visiting Ankara and telling the worldthat Turkey and the United States should work together to “overcome the challenges of our time”. The Turkish energy minister, Taner Yildiz, recently told reporters the following: “If you are saying that we should not buy natural gas [from Iran], then you are imposing sanctions on Turkey, not Iran. If you are saying that we should not buy [natural gas from Iran], then you have to say how we will meet our needs”. Clearly, the U.S.-Turkey relationship is an ambivalent one.

The U.S. should support Turkey in diversifying its gas supply in order to meet growing domestic energy demand. Turkey’s leaders have publicly stated that they intend for Turkey to become one of the top ten global economies by 2023, which marks the hundred-year anniversary of the country. To realize this goal, Turkey must ensure adequate energy supply, particularly gas. To achieve this aim, the U.S. can offer valuable assistance.

The U.S. has the greatest ability to affect Iraq’s prospects as one of Turkey’s potential gas suppliers. Iraq has over 3 trillion cubic meters of gas potential, much of which is located in the territory controlled by the Kurdish Regional Government (KRG). Already, the KRG transports oil to Turkey by trucks, and Turkey and the KRG have signed an agreement to construct oil and gas pipelines. A number of Turkish oil and gas companies are active in the KRG, and in March, Turkey and the KRG signed an energy trade agreement. In April, energy minister Yildiz said that Turkey would administer payments between Baghdad and Erbil, effectively removing Baghdad’s responsibilities. Also in April, the KRG announced that it had sold its first cargoof crude oil, the profits of which will go to a Turkish oil and gas company.

Improving Turkey-KRG energy ties have coincided with deteriorating relations between the KRG and Turkey on the one hand, and Baghdad on the other. Tensions ratcheted up between Turkey and Iraq when Erdogan supported the competitor of Iraq’s Prime Minister, Nouri al-Maliki, during the 2010 elections. When the KRG discussed direct exportation with Turkey last year, Baghdad disqualified Turkey’s national oil and gas company from an exploration deal. Later, Maliki declared Turkey a “hostile state”. Then, when Yildiz tried to arrive in the KRG by plane, Baghdad did not allow him to land in Erbil. Additionally, the KRG cut off oil exports to Baghdad in 2012 because of$2 billion in arrears owed to oil producers.

Currently, the U.S. appears to be attached to the idea of a centralized Iraqi authority, and opposes energy deals that exclude Baghdad. For instance, Secretary of State John Kerry recently toldBarzani “to give up attempts to export oil from the region to Turkey via pipelines without Baghdad’s consent”. It is unlikely that the KRG or Ankara will heed Kerry’s words.

Given this scenario, the U.S. has two options for dealing with the growing relationship between Turkey and the KRG. It can either consent to flourishing bilateral ties or it can work to create a deal that includes Baghdad. The latter option would be difficult, if not impossible, and would require a large investment of time and resources. The first option would require almost no effort, but it would have a huge political cost in that it would signify a reversal of U.S. policy towards Iraq over the last decade. Additionally, this would likely further complicate the already difficult Baghdad-Erbil relations, and undermine the unity of the new Iraqi state. If the U.S. chose to consent to growing energy ties between the KRG and Turkey, it could play a nuanced approach by maintaining a façade of rhetorical opposition.

Despite these negative consequences, the U.S. would stand to significantly benefit from allowing KRG-Turkish relations to develop for three reasons:

1) Turkish-U.S. relations would improve. At the moment, Turkey is desperately seeking new gas suppliers, and the U.S. is essentially telling Turkey to ignore its closest and potentially most helpful opportunity.

2) The U.S. would save resources by pursuing a laissez-faire approach to regional politics, rather than enmesh itself in efforts to broker a three-way energy deal. This is significant in an era after a global financial crisis and two costly wars, in which fiscal consolidation is deemed necessary.

3) Iran’s influence in Iraq would diminish. Currently, Baghdad is influenced by Iran. KRG energy exports would strengthen the KRG relative to Baghdad, and would thereby reduce Iran’s influence in Iraq overall.

KRG gas offers an obvious opportunity for developing the “model partnership” that Obama spoke of in 2009. If the U.S. decides to resist its urge to impede growing KRG-Turkey energy relations, then regional geopolitics will determine the natural course of things.

Nicholas L. Borroz is a Middle Eastern Studies student at the Johns Hopkins School of Advanced International Studies, where he focuses on Eurasian geopolitics of energy.